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Sinopec (SNP) Makes Major Shale Gas Discovery in Xinye Well-1

·3-min read

China Petroleum & Chemical Corporation SNP, also known as Sinopec, made a significant shale gas discovery in the Xinye Well-1, situated in Qijiang, Chongqing.

The Xinye-1 discovery well, which has a depth of 5,756 meters, was drilled at the Xinchang structure in China’s southwestern Sichuan Basin. Sinopec achieved a daily production capacity of 530,000 cubic meters of shale gas in its Xinye-1 discovery well. The latest discovery brings the total production at the company’s southeastern Sichuan Basin to 1.19 trillion cubic meters.

Sinopec has established the shale gas resource belt of Xinchang South, Dongxi, Dingshan, Lintanchang in the southeastern Sichuan Basin. The resource belt has a favorable position, with extensive shale gas resources. This makes it a significant area for Sinopec’s exploration and production of shale gas. The belt’s average well depth is more than 3,500 meters.

The problems of developing deep deposits involve complex ground stress and deep burial depth. Sinopec focuses on exploring deep shale gas, and innovative concepts and technologies, including fracturing for deep shale gas wells. Notably, Sinopec achieved a 100% drilling ration of high-quality shale.

The latest find would be Sinopec’s second-largest shale gas discovery after its Fuling shale-gas field development to enhance China’s energy security. The company intends to develop the find into a major production hub in the coming years. Sinopec plans to continue its exploration breakthroughs with its shale-gas resources in the area.

Company Profile & Price Performance

Headquartered in Deyang, China, Sinopec is one of the largest petroleum and petrochemical companies in Asia.

Shares of Sinopec have outperformed the industry in the past three months. The stock has lost 6.1% compared with the industry’s 14.7% decline.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Stocks to Consider

The company currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

PDC Energy, Inc. PDCE is an independent upstream operator that explores, develops and produces natural gas, crude oil and natural gas liquids. The company has hedged a portion of its 2022 oil production at attractive prices. At that price, PDCE’s hedges are expected to add robust positive value in revenues.

As of Mar 31, 2022, PDC Energy had $1.65 billion in total liquidity, while its credit facility currently has a total borrowing base of $3 billion. PDCE’s debt maturity profile is a favorable one.

Imperial Oil Limited IMO is one of the largest integrated oil companies of Canada. IMO’s debt-to-capitalization of 18.9% is quite conservative versus 32.1% for the sub-industry to which it belongs. Apart from low leverage for its industry, the company has ample liquidity, with cash and cash equivalents of $1.7 billion.

Imperial Oil remains strongly committed to returning money to investors via dividends. The company’s board of directors recently approved a hike in quarterly dividend payment. The new payout of 34 Canadian cents is 26% above the prior dividend.

Phillips 66 PSX is the leading player in each of its operations like refining, chemicals and midstream in terms of size, efficiency and strengths. PSX currently has a Zacks Style Score of A for Value, Growth and Momentum.

Phillips 66 has hiked its quarterly dividend to 97 cents per share, representing an increase of 5% from the prior quarter. With the recent resumption of the stock repurchase program, the increment in the quarterly dividend represents Phillips 66’s strong focus on returning capital to stockholders.


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